Real Estate Nationwide

Paradise Valley, one of the more affluent communities in the greater Phoenix metropolitan area, has been especially hard-hit by the nationwide recession. Paradise Valley real estate continues to be driven by foreclosures, according to a February 12, 2010 article in the Arizona Republic. The piece, written by Ken Alltucker, found that “Foreclosures remained a dominant force in the Phoenix area’s housing market in January, as foreclosures and resales of foreclosure homes accounted for two-thirds of existing-home transactions during the month, according to an Arizona State University Report.” The author of that report, Jay Butler, stated that “The whole thing is the return of the job market. If the job market strengthens, that will create consumer confidence. Job growth is the key.” Overall, the rate of foreclosure declined from around 4,000 in December to roughly 3,500 in January.

Paradise Valley real estate for sale, as well as other properties in Maricopa County, continues to decline in the first quarter of 2010. According to a February 14, 2010 article in the Arizona Republic, “Most Maricopa County homeowners will see another significant decline in their homes’ value when they open their 2011 property-assessment notices in the next few days. But property taxes for the coming year still may go up as the state, cities and school districts struggle to close huge budget deficits.” The piece, written by Catherine Reagor, continued to say that “During 2009, the overall median value of homes in the county fell 15.2 percent, from $155,300 to $131,700, according to the latest report by the Maricopa County Assessor’s Office. This decline follows a 23 percent drop in home values during 2008.”

A second article, written ten days later, also by Catherine Reagor, found that construction of new Paradise Valley and Phoenix-area homes for sale also declined. The February 24, 2010 article noted that “The federal tax credit for homebuyers boosted new-home sales in metro Phoenix last year. But the expiration of the credit looms, and new-home sales and building have slowed again. In January, new-home closings in the Phoenix area fell to 479, the lowest level in decades, reports the ‘Phoenix Housing Market Letter.’”

The frightening amount of real estate foreclosures in recent month is somewhat shocking but can be explained by examining a variety of factors. In essence, the mortgage meltdown was not a single party’s fault but rather the coincidental failure on many different parties’ part. On a high-level, the meltdown was caused by greed and foolishness. Everyone involved in the industry wanted more than their fair share of the pie. Mortgage brokers were perceived to find their customers the lowest interest rates. However, they started to give their customers the perceived going rate rather than the lowest possible one. This greed for more money was just part of the problem.

Some real estate appraisers began to appraise homes for the list price so that the sale would go forward and the buyers’ and sellers’ real estate brokers will not lose a commission, even though the appraiser’s client is the homebuyer. Hedge fund managers became riskier and tried to increase their portfolios on greedy basis by trying to play significant odds. Credit card companies raised their rates. Buyers felt that they had no responsibility. All of these players failed in one aspect of their function or another, leaving the world economy in the biggest predicament it has faced in years.